- GBP/USD is expected to decline to about 1.3495 during Monday’s Asian session.
- Federal Reserve Chair Powell has hinted at potential interest rate cuts.
- High UK inflation figures from July decrease the chances of a BOE rate cut this year.
The GBP/USD pair is likely to face selling pressure, nudging down to around 1.3495 in the Asian session on Monday. The recent demand for the US dollar is contributing to this decline. However, comments from Federal Reserve Chair Jerome Powell could mitigate some losses for the GBP/USD pair. Additionally, new home sales and the Chicago Fed National Activity Index will be published later on Monday.
Powell mentioned during the Jackson Hole Symposium last Friday that the central bank might be looking to cut interest rates soon after the September policy meeting. He described the current economic landscape as “challenging,” noting that inflation risks are trending upwards while employment presents some concerns. The growing anticipation for rate reductions by the Fed may apply pressure on the dollar, limiting declines in key currency pairs.
Traders are currently seeing an 85% likelihood of a Fed rate cut following Powell’s indications at Jackson Hole.
Meanwhile, in the UK, the anticipated July inflation data has fueled expectations that the Bank of England (BOE) may be moving toward fewer interest rate reductions. Earlier this month, the BOE lowered rates from 4.25% to 4.0%, returning to what it describes as a “slow and cautious” approach to easing monetary policy. The market has not fully factored in another quarter-point drop until March 2026. If this week doesn’t bring significant UK economic data, the dynamics of the USD may dominate the major pair’s movements in the near term.
